Democratic Republic of Congo: Economic and Political Overview

Economic Indicators

Amidst a challenging environment, the Congolese economy demonstrates resilience, albeit with a slight dip in growth anticipated for 2023 compared to initial forecasts. With heavy reliance on the mining sector and limited diversification, the DRC remains vulnerable to shifts in global commodity prices, leading to notable impacts on public finances during periods of price decline. Throughout 2023, public finances faced considerable strain, leading to a deterioration in the budget situation and an acceleration of inflation. The overall GDP growth was estimated at 6.7% in 2023 (from 8.9% one year earlier, IMF). Despite an anticipated slowdown in growth in 2024 due to the conflict in the eastern region of the country, economic expansion is expected to remain robust (4.7%, IMF), supported by the production and exports of copper and cobalt.

The moderate public deficit in 2023 saw a slight increase due to election and security expenditures, as well as lower revenues stemming from cobalt price declines and reduced taxes on windfall profits. These factors have impeded fiscal consolidation efforts outlined in the IMF's three-year USD 1.5 billion Extended Credit Facility, set to expire in mid-2024. The 2024 budget will prioritize spending by discontinuing fuel subsidies for the mining sector and settling arrears to suppliers, while election-related spending will cease. However, public sector salaries, notably for the army, and rising military and security expenses will continue to strain spending. Large mining revenues, buoyed by a mining price resurgence, are expected to help stabilize the deficit. Additionally, in January 2024, the country renegotiated a 2008 contract with China for copper and cobalt mine exploitation, increasing the initial promised amount from USD 3 billion to USD 7 billion. The surplus will be channeled into infrastructure projects, primarily roads, over the next two decades (Coface). The public debt-to-GDP ratio was estimated at 13.3% in 2023 by the IMF, with a downward trajectory expected over the forecast horizon (9.1% by 2025). In 2023, double-digit inflation surged due to elevated food prices and currency depreciation (estimated at 19.1% by the IMF). However, the weakening of the Congolese franc is expected to be less severe in 2024, partly due to the rebound in mineral prices, which will bolster reserves to over 2.5 months of imports and curb inflation. Additionally, the effects of monetary tightening, although partial, will influence prices following the Central Bank of Congo's significant increase in its key rate from 11% to 25% in October 2023.

The DRC is one of the poorest countries in the world, with around 62% of the population living in extreme poverty (World Bank, 2022). It is among the lowest-ranked in the human development index and violence is frequent, especially in the east of the country. According to the latest data from the World Bank, in 2022, the unemployment rate in the country stood at 4.5% - a slight decrease from the previous year, when that rate was 4.7%. However, among the employed share of the population, a high percentage of workers have informal jobs. The country’s GDP per capita was estimated at USD 1,337 in 2022 by the World Bank, one of the lowest in the world.

Main Sectors of Industry

The agricultural sector represents 17.4% of GDP and employs 56% of the population (World Bank, latest data available). The vast majority of the population is engaged in agricultural activities for their subsistence and not for commercial purposes. Principal cash crops encompass coffee, palm oil, rubber, cotton, sugar, tea, and cocoa. There has been notable progress in cultivating cocoa and coffee for overseas trade. Additionally, food crops consist of cassava, plantains, maize, groundnuts, and rice.

The industrial sector contributes to 47.7% of GDP and employs 10% of the active population. The country is presented with vast natural resources, the mining sector playing a major role in the economy and being the main source of export earnings. The Katanga region is particularly rich in minerals, including copper, cobalt, zinc, cassiterite, manganese, coal, silver, cadmium, germanium (a fragile element used as a semiconductor), gold, palladium (a metallic element used as a catalyst and in alloys), uranium, and platinum. The DRC also has deposits of gas (methane) and diamonds. Manufacturing plays an important role in the country's economy, despite the lack of skilled labor and machinery, accounting for 17% of GDP (World Bank). According to the same source, mineral rents account for 28.8% of GDP, the highest ratio in the world.

The services sector contributes 32.1% of GDP and employs 34% of the working population. The banking system is dominated by foreign companies, but only a fraction of the Congolese have a bank account. It consists of the Central Bank of Congo (BCC) and 18 commercial banks, along with savings/credit cooperatives, microfinance institutions, financial transfer services, and one development bank named SOFIDE. Tourism is also underdeveloped due to the prevailing security problems in the country.

 

Breakdown of Economic Activity By Sector	Agriculture	Industry	Services
Employment By Sector (in % of Total Employment)	55.3	10.0	34.7
Value Added (in % of GDP)	17.4	48.6	31.5
Value Added (Annual % Change)	2.4	15.7	3.3

Source: World Bank - Latest available data.

 

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Monetary Indicators	2016	2017	2018	2019	2020
Congolese Franc (CDF) - Average Annual Exchange Rate For 1 MUR	28.43	42.47	47.81	46.42	47.05

Source: World Bank - Latest available data.

 

 

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Indicator of Economic Freedom

Definition

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:

49/100

World Rank:

165

Regional Rank:

43

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation

 

 

Foreign Trade in Figures

The DRC is open to international trade, which represents 95% of its GDP (World Bank, latest data available). With 80 million hectares of arable land and over 1,100 minerals and precious metals, the DRC has the potential to become one of the major exporting countries on the continent and a driver of African growth. The country mainly exports refined copper (USD 16.3b), cobalt (USD 5.99b), copper ore (USD 1.55b), raw copper (USD 1.37b), and crude petroleum (USD 916m), while imports are led by refined petroleum (USD 1.12b), sulphur (USD 979m), delivery trucks (USD 367m), stone processing machines (USD 363m), and iron structures (USD 285m – data OEC 2022). Between 2020 and 2022, copper exports from the Democratic Republic of Congo surged by nearly 50%, climbing from 1.601 million tonnes in 2020 to 2.394 million tonnes in 2022, with intermediate figures of 1.797 million tonnes in 2021. This remarkable growth is primarily attributed to the surge in copper prices, which soared by 51.3% to an average of USD 9,299.3 per tonne in 2021, substantially boosting the export value of copper. Additionally, cobalt exports increased from 86,590 tonnes in 2020 to 115,371 tonnes in 2022, with an estimated 93,010 tonnes in 2021.

The Democratic Republic of Congo’s key export partners are China (USD 15.6B), Singapore (USD 1.36B), United Arab Emirates (USD 1.3B), Hong Kong (USD 1.24B), and Tanzania (USD 1.17B), with imports coming chiefly from China (USD 5.06B), Zambia (USD 1.51B), South Africa (USD 1.47B), United Arab Emirates (USD 734M), and India (USD 680M – data OEC 2022).

Although the DRC's trade balance was structurally negative, the takeover of the raw material prices plays in favor of the exports growth and of the rebalancing of current accounts, making the country’s trade balance turn positive in the last few years. According to figures by WTO, exports of goods totaled USD 28.2 billion in 2022, against USD 11 billion in imports. As per services, the DRC is a net importer (USD 4.5 billion in imports vs. USD 109 million in exports).

Sources of General Economic Information

Ministries

Ministry of Mines
Ministry of Hydrocarbons
Ministry of Environment and Sustainable Development

Statistical Office

Statistics about DRC

Central Bank

Bank of the Central African States

Stock Exchange

Central African Stock Exchange

Search Engines

Google.cd

Economic Portals

Financial Times
BBC News

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